There's been no shortage of news and interest surrounding electric vehicle (EV) leader Tesla(NASDAQ: TSLA) this year. The stock has more than doubled so far in 2023. But one Wall Street analyst thinks the stock is heading back down to near where it began the year.
A crash could be coming
On Friday, Guggenheim analyst Ronald Jewsikow raised his firm's price target for Tesla stock, but that doesn't mean he thinks it's a good buy. The new price target of $132 per share was bumped from $125 as Jewsikow acknowledged continued strong sales overseas and the likelihood that Tesla hits its 2023 global production target of 1.8 million EVs. But he still thinks the company is valued way too high. Jewsikow's price target represents a drop of 48% from Friday's closing price.
There's no denying that Tesla is valued with a high price-to-earnings (P/E) ratio. But there's another side to the Tesla story. That side was told by a different Wall Street analyst just one day before the Guggenheim report was released. Deutsche Bank analyst Emmanuel Rosner lowered his firm's price target on Tesla by $15 per share to $260, but still thinks it's a buy.
What should investors believe?
Rosner also thinks the company will reach its 2023 production guidance. He also agrees that there are risks ahead with potential headwinds for growth and earnings. So what gives?
The two analysts agree on the basics, but not the valuation. It comes down to what analysts see beyond the next year or two. That conundrum reflects how investors need to think about Tesla, too.
Rosner sees a new phase of growth coming when Tesla launches its next-generation platform. That could also mark a new slate of EV offerings to stir fresh demand. Lower interest rates could also help consumers decide they can afford to transition to an EV. Tesla also has a burgeoning energy storage business and continues to expand its charging network and battery production. Investors who see those ancillary businesses continuing to grow along with EV sales over the long term might agree with Rosner that Tesla can still be a profitable stock to buy now.
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Howard Smith has positions in Tesla. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.
